New (tax) levy proposal redundancy scheme.

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Forums › Politics › New (tax) levy proposal redundancy scheme.

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GV27

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#2865133 11-Feb-2022 08:28

I want to know how it's equitable. Someone living paycheque to paycheque gets barely enough to live on vs. someone who may have been earning $150K whose income drops to only moderately comfortable.

Or why the wholesale suggested benefit reforms for the social welfare we already pay for out of general taxation - what happens there now? There were plenty of recommendations for reform, few were enacted.

Another key piece of information is how mandatory deductions like child support, student loan etc or even PAYE is handled while someone is on a state redundancy stipend. Years ago, there used to be a tax credit for people who were made redundant. That, like many other redundancy provisions, was removed post-GFC.

Also, what legal protection will there be for redundancy in contracts now that the state is effectively taking the burdern of it from employers? Has modeling been done on whether this will have a destablising effect in terms of employment? Will more firms use the 'restructuring redundancy' clauses already abused by some to let staff go that they no longer want?

I haven't seen any discussion around these things and I'm not sure how you feedback on a proposal that doesn't contemplate them.

gzt

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#2865390 11-Feb-2022 13:14

GV27: Also, what legal protection will there be for redundancy in contracts now that the state is effectively taking the burdern of it from employers?

The proposal requires a minimum contract inclusion of four weeks redundancy. It is paid by the employer.

rugrat

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#2865399 11-Feb-2022 13:24

gzt:
GV27: Also, what legal protection will there be for redundancy in contracts now that the state is effectively taking the burdern of it from employers?

The proposal requires a minimum contract inclusion of four weeks redundancy. It is paid by the employer.

Yes but with my current contract my employer has to pay over 6 months to me. Am I going to be pressured to give that up. Also redundancy is 4 weeks plus longer for each year of service for newer employees.

Under this there is no protection against them employing someone new and after 6 months the cost is the same no matter who they lay off, and existing employees will be paying for the privilege of something that took nothing from pay packets before.

Also it is paid as one lump sum no matter how long takes to get new employment, plus employer has to give four weeks notice on top of that.

Edit: And I believe under current rules, once any annual leave owing period has gone by unemployment benefit is also paid which in effect would mean longer time is also available to find work, before feel effect of drop in income.

sen8or

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#2868600 15-Feb-2022 13:23

GV27:

I want to know how it's equitable. Someone living paycheque to paycheque gets barely enough to live on vs. someone who may have been earning $150K whose income drops to only moderately comfortable.

Or why the wholesale suggested benefit reforms for the social welfare we already pay for out of general taxation - what happens there now? There were plenty of recommendations for reform, few were enacted.

Another key piece of information is how mandatory deductions like child support, student loan etc or even PAYE is handled while someone is on a state redundancy stipend. Years ago, there used to be a tax credit for people who were made redundant. That, like many other redundancy provisions, was removed post-GFC.

Also, what legal protection will there be for redundancy in contracts now that the state is effectively taking the burdern of it from employers? Has modeling been done on whether this will have a destablising effect in terms of employment? Will more firms use the 'restructuring redundancy' clauses already abused by some to let staff go that they no longer want?

I haven't seen any discussion around these things and I'm not sure how you feedback on a proposal that doesn't contemplate them.

How do you define a limit for someone living paycheque to paycheque. Just because they earn $150k, they may have a hefty mortgage, student loan payments, high cost of living with multiple children etc, the generalisation that someone who earns a lot may only drop to "moderately comfortable" levels is a poor generalisation (in the same way, someone earning minimum wage may well be able to live comfortably on less because of personal circumstances).

The process has to be applied in the same manner for all by the only thing that can really be measured objectively, gross income, all else is subject to too many variables.

With the current progressive income tax system, those earning at the higher end of things already pay significantly more in tax (for example, I pay 3x the amount of tax that someone earning 1/2 my wage does) and I'm not even remotely close to the newly introduced top tax bracket.

It could be potentially more equitable to adjust the levy in line with the tax brackets (lowest % for lowest earners, highest % for highest earners).

It could be argued that someone earning less is likely to have a wider pool of jobs to look for than someone earning more, meaning they should be able to gain employment sooner than someone at the higher end who may have a narrow field of opportunity.

Of Course, I would also argue that regardless of "what I used to earn", job hunters who are paid under this scheme should be required to take what the market is currently offering. If they were an accountant earning $150k, but they can only get a job as an administrator paying less, they should have to take it (with maybe a provision to be topped up to 80% of their old income for the duration that they would have been eligible).

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